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Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it will maintain a plowback ratio of 0.40. Its projected earnings are $3 per share. Investors expect a 16% rate of return on the stock.
a. At what price and P/E ratio would you expect the firm to sell? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b. What is the present value of growth opportunities? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 30% of its earnings? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
What is Moda Textile Factory's competitive advantage?
What is the operating ratio? Capacity ratio?
The stock valuation model that determines the current stock price by dividing the next annual dividend amount by the excess of the discount rate less the dividend growth rate is called the _____ model
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